Deals of the Week: Winter of Our Discontent

Seems like many folks in pharma land are channeling Richard the Third this week. (Alas, there is no son of York to make winter's discontent glorious summer.)

Certainly staffers at both AstraZeneca and Sanofi-Aventis are less than happy: both companies announced more job cuts this week. (AZ will lay-off some 300 R&D employees from its Alderly Park site while Sanofi plans to reduce its German sales staff by 380.) And, pity the poor VCs. The Star Ledger is reporting that VCs are accepting smaller returns on smaller deals and waiting longer to cash-out as a result of the global credit crunch and the flagging IPO market.

Finally, remember Trimeris? Back in December that company put its R&D activities on hold to review its strategic options. But management isn't moving fast enough for the company's largest shareholder, HealthCor. On Feb. 1, HealthCor officials wrote a letter to Trimeris executives asking for two board seats, stating: "We are not in favor of strategic transactions other than those involving a sale of the business." (Hmm. Maybe the HealthCor folks are actually channeling Carl Icahn...)

If you, too, are suffering the winter blues, fear not. The IN VIVO Blog has a cure. (WARNING: Side-effects may include motivational deficiency disorder, sudden on-set of snarkiness syndrome (SOSS), maniacal laughter, and IN VIVO Blog addiction. Hey, there are worse things...) You guessed it. It's that time again.

• Dynogen/Apex Bioventures Acquisition Corp.: On Wednesday, Dynogen and Apex Bioventures announced they have signed a definitive agreement that will allow Dynogen to become public through a merger with one of Apex Bioventure's subsidiaries. (In case you don't know, Apex Bioventures is a special purpose acquisition company--or SPAC--that raises money for the sole purpose of buying another entity. The key thing is the SPAC can't say whom its acquiring--or even considering acquiring--before it raises the money. SPACs have enjoyed a resurgence in popularity in the life sciences in recent years as an alternative to the IPO market or a reverse merger.) The move gives Dynogen plenty of cash--the press release says the company should have up to $65 million at the deal's closing. Dynogen will certainly need it. It's currently developing two Phase II-stage drugs for gastrointestinal disorders, including irritable bowel syndrome. And given pharma's own R&D heartburn in the space, Dynogen may need the additional data before a partner with deep-pockets will assume some of the development risk. In the past, SPACs have favored companies with a shorter runway to commercialization like Alsius and Precision Therapeutics so this combination will be interesting to watch.
  
• Amgen/Takeda: Hit by declining sales of its EPO franchise and growing competition, Amgen announced a monster two-part deal with Takeda this week. In Part I, Takeda gets Japanese rights to 12 of Amgen's pipeline assets in exchange for $200 million up-front, up to $340 million in development costs, and potentially $363 million in sales-linked milestones and royalties. The Japanese firm will also buy Amgen’s Japanese subsidiary for an undisclosed sum. In Part II, Takeda takes on worldwide rights to Phase III motesanib, a small molecule angiogenesis inhibitor for cancer, for another $100 million up-front and $175 million in additional success-based milestones. The deal embodies two major trends we’ve talked about: the need to cut unnecessary infrastructure and the importance of risk-sharing in the vein of Bristol-Myers Squibb's deals with AstraZeneca and Pfizer. (For a more in-depth look at the deal, see here and here.)
  
• GE Healthcare/ Whatman: On Monday, GE Healthcare announced it was buying Whatman, a global supplier of filtration products and technologies for approximately $713 million. That's a lot of money for a research tools business, even if Whatman posted 2007 revenues of more than $225 million. Still it's a far cry from the $8 billion GE planned to plunk down for Abbott's point-of-care and diagnostics businesses, a deal that was eventually scuppered. It's likely GE has realized it must resort to a serial acquisition strategy if it's to challenge Siemens for the title of global leader in IVD. And Whatman's filtration and sample prep technologies could play a key role in building better protein and DNA-based tests, an area in which GE is interested in bulking up. Meanwhile, we continue to ponder the fundamental connections between tool and test companies, something we wrote about here.
  
• GlaxoSmithKline/ Amira: Also on Monday, GSK and Amira teamed up to develop Amira's 5-lipoxygenase activating protein (FLAP) inhibitors in a deal that could be worth up to $425 million for the biotech. (But only if it meets all potential development and regulatory milestones. Makes you wonder what the up-front payment was, doesn't it?) Most of the flap...sorry, we couldn't resist...is about Amira's lead product, AM103, a once-daily, non-steroidal asthma treatment that just completed Phase I trials in November. This isn't the first monster deal Amira has inked. Back in 2006 it signed a deal with Roche worth up to $287 million to develop three anti-inflammatory candidates.

"West," by Flickr user Dreamer7112, used under a creative commons license.

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Perlmutter: We're Not Abandoning Japan

Signing over Japanese rights to 13 development assets and selling the Japanese subsidiary doesn’t mean Amgen is abandoning Japan, insisted Roger Perlmutter, EVP R&D, in a phone interview with IN VIVO Blog a few hours after the Big Biotech announced its $300 million up-front double-deal with Takeda (see our post below). “We’re just saying that partnering is the right way for us now."

But Perlmutter acknowledged that most Western firms haven’t exactly sailed into the world’s second-largest market, where local knowledge and relationships still count for a lot. “Japan is a very special market, requiring special expertise. The process of getting into Japan [for a foreign company] takes decades, and requires a large investment.”

The money bit’s the problem: Amgen can’t afford large investments, since its annus horribilis in 2007—which may be repeated, possibly even more horribly, in 2008. Indeed, Amgen’s taking a “more strategic look” at its wider international expansion plans, according to Perlmutter. In other words, Japan might not be the only place Amgen pulls back, or partners. “Things we had anticipated we could do…we now can’t do in the same time-frame.”

But at least there are scores of willing collaborators standing by. Takeda apparently won a highly competitive bidding process for the broad alliance announced today—perhaps made more attractive since Amgen hadn’t insisted on any particular structure. “We let potential partners suggest the best way to ally” in Japan, insists Perlmutter. (Given its sellers’ advantage, Amgen would have called the shots, mind you—it has kept a co-promote option in Japan, for instance, should its fortunes change down the line.)

Worldwide rights to Phase III cancer candidate motesanib weren’t originally part of Amgen's Japan proposal--these were being advertised separately. "The compound needed more investment," clarifies Perlmutter--not least, one assumes, to help distinguish this VEGF-targeting multikinase inhibitor from its on-market competitors. Still, Takeda’s interest in that, too, helped it secure the lot: one partner’s easier than two.

Perlmutter isn’t expecting any more multi-molecule, broad ranging deals like this one anytime soon. But the party still isn’t over for those seeking biotech pipeline assets, and who have the money to pay for them. Amgen's currently partnering some of its earlier-stage molecules, too, for which it expects more valuable cash. After all, noted Perlmutter, "not a lot of folk have assets like ours."

And while not a lot of folk face quite the same near-term revenue risks, they aren’t home free, either. Big Pharma will see products with $73 billion worth of US sales lose patent protection by 2012. Which means that the kind of out-licensing and risk sharing Amgen is now doing is likely to be increasingly common among other large drug companies, too.

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Amgen Cashes out of Japan; Follows Bristol's Risk Sharing Example

It’s a sign of the times when Amgen starts licensing its drugs to mid-sized Japanese pharma.

Sure, we knew that troubled Amgen, hit by declining sales of EPO drugs and growing competition--including from forthcoming biogenerics--was looking for ways to cut costs. It had already last year declared workforce culls and its intention to partner certain R&D assets.

But this double-deal with Takeda, announced this morning, is still worth a second look. In Part I, Takeda gets Japanese rights to 12 of Amgen’s pipeline assets in exchange for $200 million up front, up to $340 million in development costs—not just for Japanese, but for worldwide development—plus up to $362 million in sales-linked milestones, and royalties. The Japanese firm will also buy Amgen’s Japanese subsidiary for an undisclosed sum.

That regional deal’s interesting enough: Amgen, while touting its wider international expansion outside of the US, is exiting Japan. It wouldn't be the first; other companies have acknowledged that this tough market is best tackled by locals, who’ll pay dearly for access to assets. Amgen's move is also about cutting infrastructure—a trend, and need, that we’ve talked about in the context of Big Pharma’s unwieldy bureaucratic machines (and Amgen, too, is increasingly compared to Big Pharma, as we noted in this IN VIVO feature.)

Part II is the most telling bit of this deal, though. For another $100 million upfront and $175 million in additional success-based milestones, Takeda takes on worldwide rights to Phase III motesanib, a small molecule angiogenesis inhibitor for cancer. It'll pay double-digit royalties on Japan sales, but will also cover 60% of ongoing development expenses outside of Japan, and share profits on a 50-50 basis.

This, in case you hadn't noticed, is Amgen doing risk- and cost-sharing, big time—like Bristol Myers Squibb did via monster deals in early 2007 with AstraZeneca and with Pfizer. Amgen's not only got itself a partner in a market that's now clearly non-core, but has also secured a good chunk of its ex-Japan costs, too, on all 13 molecules.

Amgen didn’t used to do out-licensing, at least, not until a lonely deal with InteKrin last January. Now it knows it has to: it needs the cash to help cushion some of the EPO blow (which may yet get worse following the next ODAC meeting in March) and, with commitments to cut 14% of staff, it doesn’t have the development muscle to deal with its entire pipeline in-house.

Not that motesanib is the crown jewel; far from it. It'll hardly be the first tyrosine kinase inhibitor to market, after all--hence Bear Stearns analyst Mark Schoenebaum's comment that the motesanib terms are particularly good for Amgen, since "we believe that the molecule's future is bleak."

Osteoporosis candidate denosumab is the company’s big hope—some say its only life-line—and Japanese rights to that went to Daiichi Sankyo last year, for what may now appear a rather paltry $20 million up front and $150 million contribution towards global development costs.

But Takeda’s nevertheless doing ok here. Twelve of the 13 Amgen assets are large molecules, granting the Japanese company its own foothold in biologics door, following similar moves by compatriots Astellas and Eisai Co. (along with most Western Big Pharma). Many of those were acquisition-driven, though (read more about the various strategies here).

By effectively signing a regional Japanese deal, Takeda gets to cut its teeth in biologics development alongside experts—albeit paying a price for that privilege—and will likely enjoy the comfort of ex-Japan approvals for some of the compounds before taking on the task itself at home.

And worldwide rights to motesanib—a small molecule—ticks another of the boxes on Takeda’s wish-list: international expansion. All Japanese firms (at least, all the larger ones) are desperate to expand outside their domestic market because of sluggish growth and harsh price cuts. That’s in large part what drove Eisai’s $3.3 billion cash acquisition of US spec pharma MGI Pharma in December 2007—a headline-grabbing transaction that Takeda will have badly wanted to answer to, if not, this time at least, out-do. (Read more about Eisai/MGI here.)

Photo "Pharma Spam Tower" by Flickr user shimown used under a Creative Commons license

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Deals of the Week: Deal--or No Deal

The debate over Vytorin's medical benefits and, by extension, the utility of all cholesterol meds, continues to rage. Meantime, the Zyprexa marketing scandal reared its head: new this week, the NY Times reports Lilly is in talks with federal prosecutors to settle investigations into its marketing of the antipsychotic. If an agreement is reached, it could cost the pharma $1 billion, the largest fine ever paid by a drugmaker for breaking federal laws governing a medicine's promotion.

And, it was earnings week, with fourth quarter reports from Wyeth (up, but flat forecast for '08 due to generic Protonix), AZ (down), BMS (down, and WSJ's Health Blog highlights concerns that this big pharma may be affected by the sub-prime mess), Novo Nordisk (down, but did beat analysts' expectations sending the stock up), and Merck (down, thanks to Vioxx settlements) among others.

All in all, a crazy week, but not necessarily on the deal-making front. That's prompted this IN VIVO blogger to ponder the deals that happened--and those that did not. Without further ado, the Deal or No Deal edition.

First, a look at the actual deals that got done...

Inverness/Matria: On Monday Inverness announced its third major acquisition in the health management space, buying Georgia-based Matria for $900 million and the assumption of $280 million in debt. Definitely the big money deal of the week, though Wall Street reacted negatively to the news. Inverness continues to build through acquisition: the Matria deal is its twelfth in the past 12 months. (For more on Inverness's acquisition strategy, click here.) The company's recent emphasis on health management suggests another trend we've been following: the expansion of the diagnostic business model to include services not exclusively related to in vitro tests or reagents. Such business activity has muddied the waters stretching the definition of what it means to be a diagnostic company.

Sepracor/Nycomed: A few weeks ago when Nycomed got FDA approval for its inhaled corticosteroid ciclesonide we figured Sanofi-aventis, the original partner of Altana (bought by Nycomed in '06), still had US rights to the drug--we hadn't heard otherwise, after all. So we were a little surprised on Monday when Sepracor picked up rights to the drug (Alvesco) for $150 million upfront plus various development and sales milestones. Nycomed will also receive payments for manufacturing and royalties on sales. Alvesco's route to the US market has been chock-full of speed bumps. Way back in 2002 Altana suggested the drug might be approved in 2003, but an NDA wasn't filed until December 2003. Altana and Aventis received an approvable letter in October 2004 and the drug was launched in 2005 in Europe.

Iroko Pharmaceuticals/ Merck: Specialty pharma Iroko inked a deal with Merck for non-US commercial rights to Aggrastat, a drug used alongside heparin in patients with unstable angina to prevent cardiac ischemic events. Financial terms of the deal were not disclosed. This is the third product Merck has out-licensed to Iroko and the second in the beleaguered cardiovascular space. Last spring the company acquired rights to Indocin, for rheumatoid arthritis, and Aldomet, a hypertension treatment, from the big pharma. As we reported here, the independent futures of many spec pharmas are in question, as product-poor pharmas gobble them up in hopes of fattening their pipelines. Still, primary care remains a popular space for many, especially as big pharma eschews risky products in the cardiovascular and metabolic disease space.

(Clearly someone forgot the briefcase models.)

BiogenIdec/Genmab: Perhaps we should say "No deal, yet." This week BiogenIdec was once again in the news thanks to manueuvers by Carl Icahn to install three supporters onto the company's board. Also swirling in the ether, rumors that BiogenIdec intends to buy Genmab. Certainly, such a deal would scupper any attempts by Icahn to sell the company to another entity. Adding Genmab's pipeline would go a long way to securing an independent future for the Cambridge, MA-based biotech. But such a deal won't come cheap. In part, because it seems likely that GSK might up the ante. The British pharma, after all, has three partnerships with Genmab, including a very rich co-development, co-promotion deal for the biotech's HuMax-CD20, an antibody to treat cancer and rheumatoid arthritis. Until now, GSK's had no real reason to bring Genmab in-house--it's already got rights to the antibody cow's milk, after all. But it may not be willing to stomach the risk associated with a change in Genmab ownership, deciding its worth the hefty price tag to nail down its rights to its partnered products.

Lilly/Gastrotech: Deal or No Deal? Here's an odd one for you. On Jan 28, Denmark’s Gastrotech Pharma announced it was in-licensing Lilly’s GLP-1 analog GTP 010 for IBS and functional dyspepsia. That’s a deal, not a non-deal, surely? Well, depends on how you look at it. Simply turn it over and you get….a non-opt-in by Lilly.

Lilly and Gastrotech had been collaborating on GTP 010 since 2004, when Gastrotech took over Phase II trials of this Lilly compound in IBS and dyspepsia (in part thanks to the biotech’s ownership of some use patents for GLP-1 analogs in IBS, according to chairman Hans Schambye, though no, that wasn’t mentioned in the release).

That—four years ago--was arguably the real licensing deal. And that was also when Lilly received an option to later take over development and commercialization of the compound in return for milestones and royalties.

This week's news is that Lilly didn’t take that option, which means Gastrotech gets to keep the compound, instead, paying Lilly royalties. “Sure,” Schambye acknowledged to IN VIVO Blog, “you could look at it both ways. Either party could have licensed the drug.”

See? Hmm, exactly. Now ok, we know that small biotechs need all the positive spin they can get, but we're getting pretty close to "Press Release of the Week" territory here. Perhaps Gastrotech will do something big with 010, who knows (Lilly did take an equity stake). But please, a bit of clarity and objectivity wouldn’t go amiss.

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Deals of the Week: Beyond Vytoringate

The sky is falling! The sky is falling! It sure seems that way this January Friday morning. Global markets slid early in the week thanks to a certain R-word and its association with the US economy. Meanwhile, in pharma land the brouhaha over Vytorin data--or lack thereof--has officially morphed into a scandal, with the addition of the "gate" suffix. (Take our poll!)

As of Thursday, both houses of Congress had initiated investigations, pressing Merck and Schering-Plough for information on the timing of executive stock sales in the wake of the delayed release of results from the so-called ENHANCE trial. Adding to the bad news, comes this New York Times report, which draws the American Heart Association--remember, the group came to the defense of Vytorin just last week--into the scandal thanks to financial ties to both companies.

In the wake of such scrutiny, it's not surprising that Vytorin prescriptions have fallen. Any doubt that these two pharmas have a serious image problem should be erased by this spoof from YouTube, where the omniscient narrator voices, "Nobody knows if Vytorin is safe or effective, but with enough scientific fraud, we can sure make it look like it is."

2008 is off to a great start. Thank goodness for Deals of the Week, where we promise not to mention Vytorin, Merck, or Schering Plough again--at least in this edition.



Teva/Cogenesys: On Tuesday, the Israeli generic drugs company announced it's acquisition of Cogenesys, the albumin fusion technology play spun out of Human Genome Sciences in 2006, for $400 million. Yet again, proof of a trend we've detailed several times: pharmaceutical firms continue to bulk up their large molecule capabilities. But for generics giant Teva, this deal is as much about deepening its stake in the ill-defined, yet surely valuable, follow-on biologics arena as is it about biologics capabilities per se. And that got us thinking. How much different is this deal, really, than Glaxo's take-out of Domantis, BMS's buy-out of Adnexus, or Wyeth's acquisition of Haptogen? Pharma's made a tremendous amount of money on next-generation (or me-too) small molecules. Stands to reason that as these firms jump into biologics, this might be just the space to play in--after all, new technologies allow the pharmas the opportunity to create IP-protected versions of existing large molecules that have largely been derisked. (Note: It's probably a good thing for Cogenesys that Teva inked the deal Tuesday not Wednesday. On Wednesday came news that HGS's own albumin-fusion protein, Albuferon for the treatment of Hepatitis C, may have adverse lung-related side-effects when dosed at the 1200 microgram level. HGS says it will shift patients in the Phase III trial to a 900 microgram dose biweekly and still expects to have late-stage data on the drug by spring 2009, with a marketing application to follow later that year.)

Roche/Ventana: Requited love--isn't it romantic? On Tuesday,came the news that after attempting to pledge its troth five times--and upping its share price to $89.50--Roche finally won Ventana's hand. We advised Ventana to take the outsized $75-a-share price late last summer, as $3 billion for a company with no near-term products seemed an outrageous return. Looks like we were wrong. That extra few months of wrangling won Ventana shareholders an extra $400 million in value, with the purchase price coming very close to the $90-per-share target Ventana CEO Gleeson had been gunning for all along. But even this happy news hasn't quelled the on-going rumor-mill. Forbes is reporting that although Ventana’s board has approved the deal it was over the objections of Chairman Jack Schuler and Vice Chairman John Patience. Neither have agreed to sell their shares to Roche. That’s 12% against the deal. Larry Feinberg, manager of the $1 billion Oracle Partners hedge fund owns another 8% of Ventana’s stock. He started buying in 1999 and tells Forbes: “My strategy has been to go along with those guys.”

Estee Lauder/Allergan: Last week the self-help guide "How Not to Look Old” made its debut on the New York Times best-seller list at No. 8 in the advice and how-to category, proof that the quest for eternal youth remains a constant in our society. This week comes news that Estee Lauder Cos' Clinique Laboratories is teaming up with Allergan to develop and market a new up-scale skin care line that will only be available from physicians. The new line will be priced at a premium compared to both Clinique's retail products and Allergan's physican dispensed offerings, which include Prevage MD and Forte. "The big idea here was: How do we become a leader in skin care?" says Allergan's CEO David Pyott. Allergan, is of course, the company that brought the world Botox, and has been a leader in showing the world how lucrative it can be to blend cosmetics with aesthetic medicine.

Forest/Novexel: Forest Laboratories plans to shell out $109.5 million in up-front fees to license North American rights to Novexel's preclinical intravenous beta-lactamase inhibitor, NXL104, which is being developed in combination with Forest's ceftaroline. (For those who don't remember, Forest acquired that product as a result of its 2006 acquisition of Cerexa.) If development work bears fruit--the combination is scheduled to enter the clinic in 2009--Forest will owe an additional $109.5 million. In addition, Forest also won first negotiation rights on another combination antibiotic--NXL104 plus ceftazidime, another cephalosporin with a slightly different activity spectrum compared to ceftaroline. This is the seventh major in-licensing deal for Forest in the last two years. While other pharmas have looked to biologics and other novel technologies to rejuvenate their pipelines, Forest is proving it has the know-how to license and succeed with primary care products, from anti-infectives to hypertension medicines such as Daiichi Sankyo's Azor to irritable bowel syndrom drugs such as Microbia's linaclotide. In other words, this spec pharma is proving it can succeed in big pharma's sandbox. For more on Forest's efforts in the primary care space check out this article from the December issue of The RPM Report.

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Deals of the Week: You Can't Always Get What You Want

It's been a busy--and, for some, disheartening--week in biopharma land. Just three days after researchers disclosed that Vytorin, the highly touted cholesterol drug that combines Schering's Zetia and Merck's Zocor, is no more effective at preventing heart disease than Zocor alone, came the first class action law-suit. David Rheingold, the attorney in the case, filed the federal suit on behalf of his momma. (What a good son.)

The Vytorin kerfluffle aside, Novo Nordisk announced it was shelving its AERx inhaled insulin drug while NitroMed announced it would no longer provide sales and marketing for BiDil, the first drug approved for use in a specific racial group. As part of its retrenching, the company laid-off 70 of its 90 employees and hung out a for sale sign, hiring Cowen and Company to "explore strategic options."

NitroMed wasn't the only company to announce it was "restructuring". So did Novartis, which took a $444 million charge to pay for a program that will cut thousands of jobs. In addition, the company announced that its twice-delayed diabetes treatment, the DPP-IV inhibitor Galvus, may never make it to the US market at all. (The drug was approved by the EU back in September.)

All of which reminded this IN VIVO blogger of that classic Rolling Stones tune "You Can't Always Get What You Want." (You know what comes next.)

Pfizer/Scil Technology: Another week, another Pfizer deal. This blogger admits she was nonplussed upon reading the news release. Pfizer and ... Scil? A German tissue regeneration player? But yes, devoted readers, Pfizer has once again demonstrated its passion for biotech products, signing a $250 million deal to in-license world-wide rights to Scil's osteoarthritis therapy, CD-RAP, to regenerate tissue in aging joints. (Hey, it wasn't an acquisition.) The companies didn't break out how the $250 million in potential rewards will be split among up-front fees and milestone payments. But Ed Harrigan, Pfizer's SVP of worldwide business development, did say this in a news release:"This partnership reflects Pfizer's on-going commitment to pursue the best science anywhere on the globe and secure novel technologies and products that will complement our existing research programs." (We're grateful to Ed Harrigan and his team--their biologics focused deal-making continues to make us look smart.)

Alfacell/ Strativa Pharmaceuticals: Alfacell licensed its Phase III cancer therapy, Onconase, to Strative Pharmaceuticals for $5 million up-front and up to $225 million in cash milestones. Under the terms of the agreement, Strativa has exclusive marketing, sales and distribution rights to Onconase for the treatment of cancer in the U.S. and its territories. Alfacell, meanwhile, retains the rights for product manufacturing, clinical development and obtaining regulatory approvals. The drug, which is a natural protein isolated from the leopard frog, was developed using Alfacell's ribonuclease (RNase) technology for the treatment of inoperable malignant mesothelioma, a rare cancer affecting the lungs and usually associated with exposure to asbestos. Though the exact mechanism of action is unclear, the drug appears to selectively target diseased cells by triggering apoptosis. Onconase has been granted orphan drug status as well as fast-track development status by the FDA for the treatment of malignant mesothelioma.

Warburg Pincus/ Lifecore Biomedical: Warburg Pincus, the global private equity player, agreed to buy Lifecore Biomedical for $17 a share, in an all-cash deal worth roughly $239 million. (That's a 30% premium to Lifecore's average share price for the past 30 trading days in case you were wondering.) "As a private company, Lifecore will have greater flexibility to focus on its long-term strategic direction. Warburg Pincus and its affiliates have confidence in Lifecore’s future and will support achieving our long-term goals,” said Dennis Allingham, Lifecore's President and CEO in this release. We admit that Lifecore's profile--it's mostly a dental and OEM supplier--makes it the kind of device company to which we don't typically devote a lot of ink. It's also true that $239 million is small potatoes in the PE world. (Just a few months back TPG Biotech ponied up $1.3 billion for the Canadian Axcan Pharma and its portfolio of treatments for gastrointestinal disorders, for instance.) But Warburg Pincus's involvement has us intrigued. And, it's in keeping with the deeper entwining of biopharma and PE as the credit crunch halts mega-deals in other industries.

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“We’re a Buyer, not a Seller,” Says Genzyme With Isis Deal

Genzyme’s $325 million up-front deal with Isis Pharmaceuticals on Phase III cholesterol-lowering drug mipomersen achieves two goals for the Big Biotech. It plugs a worrying gap in the company’s otherwise healthy growth trajectory and makes a bold statement about Genzyme’s determination to remain independent.

After activist shareholder Carl Icahn took a small stake in the company at the back end of last year, Genzyme needed to do something to minimize takeover speculation. CEO and chairman Henri Termeer--although always clear in his desire to drive an independent ship--took the trouble to go on the road and make his case, as reported in the Wall Street Journal.

Fortunately, as we now know, Termeer was also busy bidding for mipomersen. The product went up for auction last summer, according to Isis' CEO Stanley Crooke, and the timing of Genzyme's victory is opportune. The deal's size and structure--$150 million for about 5% of Isis’ equity, plus $175 million in cash upfront, a headline-grabbing potential $825 million in development and regulatory milestones, plus up to $750 million in commercial milestones—sends a strong message that Genzyme is out to buy and build, not to sell.

The deal also reinforces elements of Genzyme’s diversified-yet-specialist strategy, whose advantages, as we argued in a recent IN VIVO feature, are becoming increasingly clear. Mipomersen, a lipid-lowering compound that targets apolipoprotein B-100, is a weekly injectable being investigated, in the first instance, for familial hypercholesterolemia (FH). That’s a relatively rare, inherited disorder, suitable for a specialist sales force—bang in Genzyme’s bailiwick. Termeer describes the asset in the press release as a “very Genzyme-like product.”

Not that cardiovascular is exactly a Genzyme-like TA; not yet, anyway. For now in this area it sells only Cholestagel, a tablet for high cholesterol patients who can’t tolerate statins or who need additional help lowering LDL. But that’s the diversification bit: CV may now become one of Genzyme's emerging franchises as the company continues to broaden out beyond lysosomal storage disorders, where top-selling Gaucher’s treatment Cerezyme accounts for about 30% of total revenues.

Mipomersen, on paper at least, fits beautifully into Genzyme’s tried-and-tested strategy of broadening out assets beyond an initial niche indication and picking up lucrative corners left un-served by larger, sometimes primary care drugs. Thus mipomersen, due for filing in FH next year, will also be tested in patients with high cholesterol and at high risk of cardiovascular events—those for whom statins don’t work or aren’t suitable. (The drug, a second-generation anti-sense product, likewise confirms Genzyme's willingness to embrace novel, often risky technologies.)

Given the fit, the timing, and the drug's late-stage, it’s no surprise to see the smaller biotech win above-average up front fees, lucrative milestones--although, as Bear Stearns analyst Mark Schoenebaum points out, it’s unclear how these are distributed--and also at least 30% of profits without lifting a finger on the commercialization front.

That detail—commercialization--is perhaps more surprising: until recently, most biotechs have tended to go for a co-promotion option on their drugs at a minimum (although that trend has been waning, as we reported here). If the drug reaches $2 billion or more in sales (unlikely; Bear Stearns is forecasting a conservative $750 million) Isis would be eligible for 50% of profits, with a linear sliding scale in between.

Genzyme also has preferred access to future Isis drugs in CNS and certain rare diseases; that, courtesy of the $150 million equity purchase, at more than double Isis’ pre-announcement share price. Isis’ shares rose almost 50% in after-hours trading on Monday, according to Reuters.

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Deals of the Week: New Year's Resolutions

It's day four of the New Year and you've already broken that resolution to exercise, eat better, or spend more time with the family. Hey, it's okay. Those are tough ones to keep.

So how about an easy one: tune in every Friday for a run-down of the week's most interesting biopharma deals. It's a quick, easy way to stay on top of the industry's events, leaving more time for the kiddos or the gym, or your blackberry.

Once again, we bring you:

(Aren't you glad we aren't on strike?)

Admittedly, deal-making activity has been lighter than usual this past week. We surmise that's because execs are shining their shoes, amassing their business cards, and honing their laser pointer skills in preparation for the biotech's annual coming out party, aka the JPM conference. (The burning questions: 1. Can a company's success be correlated to its executives' neckwear preferences? 2. What color will the famous tote bag be this year?)

Sepracor/Bial: Specialty pharma Sepracor inked a much-needed licensing deal with Bial on Wednesday for the Portunguese drug maker's Phase III anti-epileptic compound BIA 2-093. (Naturally enough for Sepracor, the drug is an enantiomer, (S)-licarbazepine, a metabolite of an analogue of the off-patent anti-convulsant carbamazepine.) Last year the company lost the bidding war for Kos Pharmaceuticals to Abbott Labs and analysts began raising questions about the company's pipeline beyond its insomnia drug Lunesta. (For more, read here.) Under the terms of the agreement, Sepracor will pay Bial a $75 million up-front fee, plus an additional $100 million in development and regulatory milestones for rights to the compound in the US and Canada. In addition, Sepracor will also file the compound's new drug application with the FDA, which should occur late this year or early in 2009. "Strategically, BIA 2-093 further strengthens our existing central nervous system portfolio, which includes Lunesta for the treatment of insomnia, as well as earlier-stage candidates for various central nervous system disorders," said Adrian Adams, President and Chief Executive Officer of Sepracor in a company press release.

Merck/Addex: In terms of "biobucks", the Merck/ Addex agreement was the week's biggest splash. As we wrote yesterday, the two companies announced an exclusive licensing agreement centered around the Swiss biotech's ADX63365, an allosteric modulator currently in preclinical development for schizophrenia and other undisclosed indications. The deal terms are potentially rich: Addex could see up to $680 million in downstream development, regulatory, and sales milestones, but that would require an unlikely alignment of the R&D planets. Guaranteed money was not quite as generous, but the solid upfront of $22 million for a non-clinical compound does suggest Merck is taking the idea of allosteric modulation seriously, and is roughly an order of magnitude greater than the company's previous discovery deals ... so who knows what a deal around its lead Phase IIb candidate might look like (you'll have to wait til next year to find out). For more on Addex and allosteric modulators check out this profile of the company from the January 2006 START-UP.

Sanofi-Aventis/IDM Pharma: Bad news for IDM Pharma this week. On Monday, the company learned that its partner since 2002, Sanofi-Aventis, would no longer help develop its dendritic cancer vaccine, Uvidem, which is currently being tested as a melanoma treatment. No reason was given for the move, but cancer vaccines have had a tough go in recent months, especially after the FDA required one of the field's leading lights, Dendreon, to submit additional efficacy data for the approval of its immunotherapy Provenge. IDM noted in a release that it will continue to evaluate the Uvidem clinical program, which recently completed Phase II trials "with promising results." But already, restructuring plans are in the works, involving "staff reductions in the Company's workforce and a review of the assets and costs associated with products under development." The news comes just weeks after the biotech issued a press release with updated news about its pipeline and a promise to investigate "strategic alternatives."

Sanofi Pasteur/Crucell: On Thursday, Dutch antibody maker Crucell and Sanofi Pasteur, the vaccines division of Sanofi Aventis, announced they were teaming up to develop next-generation rabies biologicals to be used in association with a vaccine for post-exposure treatment against this fatal disease. Under the terms of the agreement, Sanofi will pay Crucell 10 million euros following the deal's execution; Crucell could receive an additional 66.5 million euros in milestones as well as an undisclosed percentage on sales of the final product if the rabies antibodies pan out. To date, Crucell has developed a combination of two rabies mABs that are well tolerated and provide immediate neutralizing activity in Phase I clinical trials. Crucell expects to enter Phase II clinical trials in the first half of this year. If approved, peak sales of the rabies antibody cocktail could exceed $300 million.

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Addex Ups Dealmaking Ante

Addex Pharma today took a step up the dealmaking ladder, partnering its pre-IND positive allosteric modulator ADX63365 and back-up compounds with Merck & Co. for $22 million upfront plus milestones and royalties. Addex can also opt to co-promote resulting products in certain EU countries.

63365 targets the metabotropic glutamate receptor 5 (mGluR5), which Addex says has shown antipsychotic properties improvement of cognitive dysfunction in preclinical studies.

The worldwide exclusive license deal comes on the heels of the two companies' $3 mllion up-front December pact, a discovery deal around positive allosteric modulation of a related receptor, mGluR4, which could lead to products to treat Parkinson's and other diseases. Addex inked an earlier discovery deal in 2005 with Johnson & Johnson around positive allosteric modulators of mGluR2.

Addex's allosteric modulators bind to sites on drug targets that are distinct from the target's active site, where endogenous ligands or conventional drugs bind, offering a variety of potential advantages. Positive allosteric modulators (PAMs) can potentiate the effects of endogenous ligands or conventional drugs, while negative allosteric modulators (NAMs), such as Addex's lead compound ADX10059, can dampen the effects of endogenous ligands (see above).

Enthusiasm for today's deal may be tempered a bit with news that ADX10059 did not reduce acute anticipatory anxiety in a small Phase IIa study in patients with dental anxiety, also announced this morning. Addex has previously reported successful Phase IIa results for 10059 in GERD and migraine, however, and the biotech aims to partner the candidate post-Phase IIb.

Ladder photo from Mayhem & Chaos Photo Blog used under creative commons license

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Deals of the Week: The Christmas Edition

'Twas four days before Christmas and all through the house, not a creature was stirring except for...the biz dev teams at several major pharmaceutical companies. My, has it been a busy week for those folks.

It's almost as if the Ghost of Christmas Yet to Come paid them a visit, offering a cautionary tale of the industry's fate 20 years hence: A graveyard filled with names like Pfizer, GlaxoSmithKline, and Eli Lilly. Perhaps, not wanting to be boiled in their own puddings or buried with stakes of holly through their hearts, the good folks at Big Pharma decided to spread some Christmas cheer via deal-making. (Or maybe they just needed a little retail therapy.) Without further ado:

Pfizer/CovX: Pfizer announced Tuesday it was buying the privately held next-generation protein play CovX for an undisclosed sum. The La Jolla-based biotech has developed a platform technology that links therapeutic peptides to antibody scaffolds. Already the company has three early stage compounds, one in diabetes and two in oncology. "The deal demonstrates Pfizer's ongoing commitment to build a competitive biotherapeutics enterprise, " said Corey Goodman, PhD, president of Pfizer's Biotherapeutic and Bioinnovation Center, in a press release. The acquisition bolsters Pfizer's large molecule discovery capabilities, but probably doesn't constitute an engine ala Bristol-Myers acquisition of Adnexus. As we wrote here, Pfizer appears to be a big believer in acquiring biologics capabilities through a serial acquisition strategy. Among its recent deals: the acquisitions of PowderMed, Rinat, Biorexis, and Bioren.

Merck-Serono/Idera & Merck-Serono/Flamel: Merck-Serono inked two deals this week. The first with TLR player Idera for two TLR9 compounds in the oncology space worth $40 million up-front and an additional $381 million in milestones. Not too surprisingly, shares of Idera surged on the news. It's the only big deal the biotech has inked in 2007: the company's last deal came about a year ago, when it signed a partnership with the other Merck worth $30 million in upfront payments. Merck-Serono also announced a collaboration with Flamel Technologies, which has developed a polymer drug-delivery technology called Medusa that can extend the activity of therapeutic proteins. Deal terms were small: just $2 million for investigating a protein in Merck-Serono's portfolio, as well as Flamel's R&D costs. This is the fifth deal Flamel has signed in 2007. Three months ago, it agreed to develop a controlled-release version of a protein for Wyeth.

Lilly/Ambrx & Lilly/BioMS & Lilly/Galapagos: Clearly Lilly execs took the Ghost of Christmas Yet to Come's message to heart. This pharma wins the honor for signing the most pre-Christmas deals, inking three this week alone. (And that doesn't count the news that Sidney Taurel, the pharma's pugnacious CEO and chairman, will cede his CEO hat to the friendly giant John Lechleiter, PhD, currently the company's president and COO.) On Monday, the company signed a research collaboration with Ambrx, a protein engineering company, for an undisclosed upfront fee and milestones. The deal builds on an existing collaboration signed by the two companies at the beginning of 2007. And Lilly execs should be quite familier with Ambrx: one of the biotech's co-founders, Richard DiMarchi, now a chemistry professor at Indiana University, spent two decades at Lilly as a VP of Biotechnology. On Tuesday, Lilly signed a rich licensing deal with the Canadian drug company BioMS for its multiple sclerosis therapeutic MBP8298. As part of the deal, Lilly will pay BioMS an $87 million up-front fee plus milestone payments that could reach $410 million. The two companies will share development costs, while Lilly will take over world-wide marketing. Finally, on Wednesday Lilly announced a smaller deal with Galapagos to develop potential new medicines for the treatment of osteoporosis. Galapagos will be responsible for discovering and developing drug candidates through proof-of-concept, at which time Lilly has the option to develop and commercialize them on a world-wide basis. Lilly, of course, has a great deal of expertise in osteoporosis thanks to its experience developing Evista, Forteo, and arzoxifene.

Medtronic/Weigao: On the device side, Medtronic, which has been beset by bad news associated with its defibrillator, announced Monday it was purchasing a 15% equity stake in Shandong Weigao Group Medical Polymer Company (Weigao) for $221 million. In addition, the two companies will form a JV to market therapies in the spine and orthopedic sectors. "China is key to our global strategy as we continue to expand our geographic footprint," said Medtronic president and CEO Bill Hawkins in a press release. Hawkins' comments echo those of many pharma execs. China remains an alluring prospect for both western drugs and devices, in part because of predictions that by 2020 it will vault to second in pharmaceutical market size with a market of $120 billion according to IMS Health. (Look for more on China's fledgling biotech industry in an up-coming START-UP.)

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Paying the TLR Toll

Some much needed good news for the Toll-Like Receptor (TLR) space today. Merck-Serono, a division of Merck KGaA, announced it was licensing Idera Pharmaceuticals' two lead TLR9 agonists, IMO-2055 and IMO-2125.

Under the agreement, Merck-Serono agreed to pay $40 million up-front, plus downstream milestones worth approximately $380 million for the two therapeutics. IMO-2055 is in Phase I clinical trials for non-small cell lung cancer and in Phase II trials for renal-cell carcinoma. IMO-2125, meanwhile, is in Phase I clinical trials in patients infected with the Hepatitis C virus who have not responded to standard treatments such as interferon-alpha. This indication is not included in the agreement with Merck, which is centered purely around oncology applications.

To date, scientists know of 10 different TLRs in the human immune system that enable the body to detect pathogenic threats--viruses or bacteria that cause disease. Both Idera's IMO-2055 and IMO-2125 are novel activators of the TLR9 protein, a molecule found in certain innate immune cells such as B cells and dendritic cells. Along with TLR7, TLR9 activation has been the focus of much research--and hype--in recent years.

It's also been the subject of some high-profile failures. In January, Coley Pharmaceuticals and its partner Pfizer announced they were suspending development of their TLR9 agonist, Actilon, after disappointing results in two clinical trials of the molecule to treat Hepatitis C. In July, Anadys also suspended development of its TLR, ANA975, yet another anti-HCV drug partnered with Novartis, because of disappointing toxicology data in animals.

But despite the disappointing results in HCV, many believe TLRs have an important role to play in cancer treatments. Certainly Pfizer remains a believer: in November the company agreed to pay $164 million to acquire its partner to gain complete access to the technology, including a non-small cell lung cancer drug in Phase III clinical trials.

Depending on the sucess of the Merck-Serono/ Idera partnership, other pharmas may become converts too.

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Deals of the Week: Beyond Biogen

Most of the chatter over the past few days has been about you-know-who and the deal that wasn't. Or the Novartis pink slips. Or the letter written to Schering-Plough and Merck by a couple of Michigan congressmen. But plenty of ink dried elsewhere this week, and we know that you know that we know that you've grown to expect Deals of the Week to talk about deals, not so much the deals that didn't happen, the layoffs, or the House Committee on Energy and Commerce. And damnit, we're not going to let you down.

• Eisai/MGI Pharma: We wrote a bit about this acquisition on Monday, and look for more in the January issue of IN VIVO. The short of it is this: the price tag, at $3.9 billion, suggests more than a little competition for the oncology/acute care specialist, and following on the heels of Celgene's $2.9 billion acquisition of Pharmion only a few weeks ago, reinforces our view that consolidation in the specialty pharma space will continue. And although the deal is by far the largest acqisition of a non-Japanese company by a Japanese pharma, perhaps it is not predictive of a wave of similar deals. Eisai boasts more of a US base, and we're told therefore, more of a dealmaking culture than its compatriots.



• Boston Scientific/Avista Capital Partners: Consider this the other shoe. Boston Scientific officials promised during their round of conference presentations last month that they’d be announcing the sale of its fluid management and venous access business sometime this month, and they did just that. The Natick, Mass. company agreed to sell the business to private equity firm Avista Capital Partners, $425 million in cash. This sale is be the last significant piece of their wholesale restructuring that would cut costs by $500 million and trim its headcount by 12% to 13%, and it’s a nicely matching bookend to last month’s sale of its cardiac and vascular divisions to the Getinge Group for $750 million. Analysts covering the company say the restructuring should help Boston Scientific go forward with its cardiovascular and cardiac rhythm management businesses. The cash also could come in handy to pay the $1.15 million Boston Scientific will pay to Advanced Bionics Corp. for its pain management program, a result of the nasty break up between the neurostim company and its one-time acquirer. Read more in the upcoming IN VIVO magazine.
  


• GSK/Oncomed: GSK's external development CEEDD and Oncomed inked a strategic alliance to discover and develop up to four antibody therapeutics against cancer stem cells, emerging oncology targets discussed in depth in this 2006 START-UP feature. The potential biobucks deal value is enormous, but the upfront payment, which is a mix of licensing fees and an equity stake, is undisclosed. Oncomed will handle development through clinical proof-of-concept, at which GSK has an option to license the MAb. The most advanced candidate, OMP-21M18, should enter the clinic next year. Bonus GSK: The pharma also teamed up with Belgian biotech Galapagos this week, paying €3.5 million in technology access fees plus milestones and 'double-digit' royalties to tap Galapagos' natural product discovery platform in the anti-infectives space.
  


• Shire/Alba: Prolific dealmaker Shire strikes again, landing ex-US, ex-Japan rights to Alba Therapeutics' AT-1001, an inhibitor of barrier dysfunction in GI disorders. The peptide is in Phase II for Celiac disease and Shire will have a look-see at Crohn's disease and other potential indications as well. Alba scored solid terms: $25 million in up-front payments plus milestones and royalties. In other Shire news, in the understated press release "Board Changes," the company said CEO Matt Emmens is stepping down, er, up, to the chairman's role, replacing retiring chairman James Cavanaugh. CFO Angus Russell will succeed Emmens next June. Somehow we doubt this is Emmens' last deal in the drivers' seat.

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Deals of the Week: It's the End of the World as We Know It

Been reading the news this week? Apparently the sky is falling in pharma land. The WSJ reports that pharma's golden age is on the wane thanks to looming patent expirations and a poor track record in product approvals. (Hmm. Where have we heard that before?) BMS is the latest pharma to announce lay-offs--yesterday it announced 10% of its workforce would go. China's drug manufacturing capabilities pose a national security risk according to the Kansas City Star. Poor Carl Icahn: it looks like Henri Temeer and Genzyme will elude his clutches after all. (For more on Genzyme's strategy, make sure to watch for our upcoming IN VIVO feature.) And an FDA advisory panel nixed the use of Genentech's Avastin for breast cancer, sending the company's stock price plunging. (C'est la vie. You can't win 'em all right?)

Yep, it's the end of the world as we know it. And I feel fine. (Thanks to Deals of the Week, of course.) Without further ado:

• Novartis/Morphosys: First up: we tip our hats to Morphosys for their avoidance of pure "biobucks" figures in telling the world what they stand to gain in milestones from their latest HuCAL alliance with Novartis, announced Monday. Revolutionary! Now on to the deal, which for Morphosys is a bit revoluationary itself. Novartis will pay the antibody specialists $600 million over ten years in committed payments (roughly 50/50 technology license fees and research support), with an additional $400 million (non-biobucks) in predicted milestone payments. Morphosys basically consolidates its discovery partnership program into this one deal--as older deals come up for renewal, they'll just expire; for example the biotech's deals with Bayer-Schering and Centocor, scheduled to expire at the end of the year, will do so. Interestingly, Morphosys is maintaining more than a small amount of independence. Novartis remains the biotech's largest shareholder, but hasn't upped its stake beyond the 7% it already held, and does not get a seat on the Morphosys board. Morphosys won't be doing any more discovery deals, but will be able to do product-focused outlicensing deals at its leisure. Novartis gains a fully human antibody discovery engine without breaking the bank.
• Merck/Addex: Not a huge deal, cash wise, but the kind of deal Addex's investors were hoping for. Addex gets $3 million upfront from Merck & Co. plus milestones and undisclosed royalties. The companies are targeting the mGluR4 receptor to develop treatments for Parkinson's disease and other indications. Addex's allosteric modulation platform essentially allows modulation of GPCRs without binding to the receptor's active site, leaving that prime real estate open for the receptor's endogenous ligand.
• Pfizer/Adolor: On Wednesday, Adolor signed a deal with Pfizer worth $30 million up-front and $232.5 million more in milestones for two compounds for pain conditions, ADL5859 and ADL5747. Both compounds belong to the delta opioid receptor agonist class, a class of pain drugs related to morphine and oxycodone, but potentially without their debilitating side-effects. As part of the deal, the two companies will split revenues and expenses in the US 60/ 40 with Pfizer taking the lion's share and Adolor retaining co-promotion rights. This is the third big deal this year for Pfizer in the pain space. This summer the company added to its pipeline, signing a $195 million deal with Hydra Biosciences for its TRPV3 antagonists and a $1 billion-plus deal with Icagen for a sodium channel modulator (For more coverage of the pain space see this 2006 IN VIVO story.) This is some much needed good news for Adolor. The company's stock was decimated earlier this year when the FDA put the brakes on the company's mu-opioid receptor antagonist Entereg because of concerns about its lack of and potential CV side-effects. (For more on this product and other GI-related opioid compounds check out this November IN VIVO feature.)
• Lilly/Aveo: Precision Therapeutics wasn't the only diagnostic company making news this week. (For more on Precision's merger with Oracle Healthcare Acquisition Corp. check out this IN VIVO Blog post.) Cancer biomarker play Aveo Pharmaceuticals announced Tuesday it had struck a deal with Lilly to help the pharma identify patients who respond to one of its cancer drugs under development. Aveo's famous for its in vivo cancer models--essentially mice that have been engineered to develop tissue-specific cancers under controllable conditions. To date, the company also has biomarker discovery deals with Schering Plough, Merck, and OSI Pharmaceuticals. Terms of the deal weren't disclosed but if there anything like the $20 million agreement Aveo inked with OSI earlier this fall, it's unlikely there's big money on the table. Historically, that's been one of the problems with the business models of these molecular diagnostic companies. Although they can sign somewhat lucrative fee-for-service deals with pharmas, these partnerhips never seem to translate into upside related to the actual commericalization of a product.
• Fresenius Medical Care/Renal Solutions: On November 29, the German dialysis product maker announced it was buying Renal Solutions, a venture-backed sorbent cartridge maker for as much as $190 million. Just two years ago, Fresenius bet big, buying Renal Care Group for $3.7 billion. That transaction gave the German company an important foothold in the US market, giving it access to more than 30,000 patients at over 425 dialysis centers. The company also made waves when it agreed to a five-year sole-supplier deal with Amgen in October 2006 for that biotech's Epogen and Aranesp. The reason: many critics saw it as aiding Amgen's strategy to prevent widespread US uptake of a competing product from Roche called Mircera. (For more on Amgen and its anemia franchise click here.)

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While You Were Dealing

The weekend was not without some dealmaking action. More to come on Monday, for sure. But lets kick off the weekend roundup with a big biologics deal between Novartis and Morphosys ...

• Morphosys has signed a "transforming" deal with Novartis. The two companies are building on their existing 2004 alliance with a potential 10-year deal to develop monoclonal antibodies. Morphosys will receive $600 million in committed payments--in addition to potential milestones and royalties and co-promotional options. The deal reduces Morphosys reliance on fee-for-service antibody collaborations, and make no mistake, in terms of guaranteed payments, it's a monster. But it also seems to entwine Morphosys' fate with Novartis Biologics', as Novartis will have near exclusive access to the biotech's platform (Morphosys is ending existing collaborations with J&J's Centocor and Bayer-Schering). We may have more to say after Morphosys' conference call on Monday.
  
• Forest Labs received an approvable letter for its nebivolol beta blocker, a decision related to FDA issues with a manufacturing plant in Belgium. As we wrote last week, approval of nebivolol could buck the trend, and Forest (and partner Mylan's) insistence that FDA found no safety or efficacy reasons to deny the drug will be heartening to the companies. Forest is continuing to plan for a January launch.
  
• Hey, did you know that Biogen Idec was up for sale? No, really, we swear. Apparently they look expensive, given the current credit crunch and aversion to Big Pharma paper.


• The FT points out that the UK's Human Genetics Commission is warning the public off the various consumer genomics information providers. For background, David Hamilton at Venture Beat Life Sciences has been all over the recent consumer genomics news.


• GSK to Viehbacher and Stout: Thanks for playing. Second prize, two weeks in Philadelphia £2 million!


• Addex has announced that it has something to announce--most likely a deal on lead project ADX10059, which is in Phase II trials for GERD, migraine, and anxiety. The details on Monday morning. [UPDATE: Nope, Addex announced an alliance with Merck & Co. this morning to discover and develop positive allosteric modulators targeting the metabotropic glutamate receptor 4 (mGluR4) in Parkinson's disease. Addex gets $3 million up-front and up to $106.5 million in first-product milestones, plus royalties, and retains co-promote options in certain European territories.]

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Deals of the Week: For Sale By Owner

For some US home owners, this week brought bad news: the National Association of Realtors reports sales of previously owned homes hit their lowest level since 1999 and single family homes suffered the biggest price drop on record in October.

Thank heavens lower sales forecasts haven't spilled over into pharma land, where M&A is the sector's only bright spot. (It certainly isn't R&D.) Hoping to take advantage of pharmas' hunger to acquire, a number of companies--including MGI Pharma, GPC Biotech, and QLT--decided this week to put themselves up for sale. In honor of their entrepreneurial spirit--or as QLT's press release noted, a willingness to "review all strategic alternatives"--IN VIVO Blog gives you Deals of the Week: The For Sale By Owner edition.

• MGI Pharma/GPC Biotech/QLT: All three companies hung out for sale signs this week. (Okay, we know this probably shouldn't count as a "deal". Try and think of it as the preamble to a deal.) It may be a sellers market in pharma land, but its tough to think either GPC or QLT will fetch a high price. As we've noted here, GPC has taken a beating for the failures associated with its lead drug satraplatin. QLT, too, has suffered in recent years as its lead therapy Visudyne competes with new anti-VEGF drugs such as Genentech's Lucentis. (Interestingly, QLT just spent $42 million on a drug-eluting punctual plug technology developed by Forsight Labs. For more, check out this recent START-UP article.) It's possible that an unlisted company seeking a route to the public markets might find attractive the significant cash reserves of either company--$90 million for GPC and $300 million for QLT. The picture may be rosier for MGI Pharma, however. As we wrote a couple of weeks ago, Celgene was willing to spend nearly $3 billion for Pharmion, a rival of MGI's. Reuters reports potential suitors could include Amgen, which might be interested in MGI's Aloxi, which treats chemotherapy-induced nausea, and BMS, which given its focus on specialty markets such as cancer, might be very interested in the biotech's Dacogen. Still all three companies should be wary of becoming the next BiogenIdec, which hung out its own for sale sign over a month ago, and still hasn't closed a deal.


• TPG Capital/Axcan Pharma: Here's a lesson for BiogenIdec and the other companies that have put themselves on the block. If you can't find a pharma company to buy you, maybe you should consider private equity. On Thursday Nov. 29, TPG Capital ponied up $1.3 billion for the Canadian Axcan Pharma and its portfolio of treatments for gastrointestinal disorders. As the NYT's Dealbook blog notes that this is the latest in a string of smaller buy-outs brought on by the credit crunch and the halt in mega-merger deals.


• GSK/Merck: Merck sold GSK exclusive US rights to an OTC version of its cholesterol lowering drug Mevacor for undisclosed milestones and royalties. It was the company's second big deal in less than a week, and came just as US workers were emerging from their tryptophan-induced hazes. (Only a British company would announce deals the day before Thanksgiving and the Monday after.) Despite the dearth of details disclosed, the announcement is intriguiing. Mevacor lost patent protection back in 2001 and Merck, in conjunction with Johnson & Johnson, tried twice to obtain OTC status for the drug--the last time back in 2005. What makes the GSK-Merck team think its more likely to succeed this time around? Perhaps it's the more open outlook FDA has embraced in approving OTC versions of Plan B and Roche's diet pill Xenical. (For more on the FDA and OTC, read here and here.) More likely, its the tremendous success Glaxo has had selling Xenical as Alli. In its earnings call last month, GSK estimated it would sell between 5 and 6 million weight-loss kits this year for about $1 billion in revenue. Merck certainly has nothing to lose. And who knows? If GSK can succeed with OTC Mevacor, it could pave the way for a US version of OTC Zocor, which has existed in the UK since 2004. An FDA advisory panel will discuss the switch at a meeting on Dec. 13.


• Astellas/Agensys: On Tuesday, Astellas Pharma announced plans to buy cancer antibody play Agensys for $387 million, including a $30 million net cash balance. The deal comes a few months after another Japanese pharma, Eisai paid $325 million for a different cancer antibody player, Morphotek. The Japanese pharmas tend to adopt US and European companies' fads a little later, so it makes sense that Astellas is only now jumping on to the large molecule bandwagon (For more on this, read here.)


• Sanofi Aventis/ Regeneron: One company that isn't, so to speak selling-out, is Regeneron. Instead, it's done a fantastic job of monetizing its therapeutic platform, called VelociSuite. In addition, to this deal with Sanofi, worth $85 million upfront plus $475 million in research funding over the next five years. the company has also inked partnerships with Bayer and AstraZeneca in the past year. (For more on the Bayer deal, click here.)

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Sanofi Aventis Walks the Talk

Sanofi Aventis had already promised at their September R&D meeting that they wanted to increase the number of biologics in their pipeline, and to be “more proactive” in business development. Today they showed that they meant it, by announcing a wide-ranging fully-human antibody collaboration with Regeneron.

Sanofi will pay Regeneron $85 million up front and up to $475 million in research funding over the next five years ($75 million in the first year and up to $100 million in years 2-5), during which time Regeneron will lead research efforts across a range of antibodies, developed using its VelociSuite of technologies. At IND-stage, Sanofi has the option to co-develop candidates identified within the collaboration, and if it chooses to do so, will take the lead and foot most of the cost.

Indeed, although the press release describes development costs as “shared”, Regeneron will only pay its portion if the candidate is successful. “We’ll fund 100% of Phase I and Phase II,” said Jean-Michel Levy, SVP Business Development, and 100% of the Phase III costs in the first indication. Additional Phase III trials would be 20% funded by Regeneron, and the biotech will “reimburse half of the overall development costs from its share of future profits to the extent that they are sufficient for this purpose,” according to the release.

Will they be? Well, Regeneron will receive 50% of profits in the US, although Sanofi will lead commercialization and consolidate sales. Elsewhere, the smaller party will receive between 35% and 45% of the profit pie, although its co-promote option—still a popular deal feature these days, even though there are signs that might change—is on a worldwide basis. If aggregate sales reach $1 billion, Regeneron will be entitled to up to $250 million in sales milestones (which would help with the development-cost pay-back…)

Big Pharma laying rich stakes in antibodies is hardly a new concept; we’ve tracked the trend extensively, including here. What’s perhaps more surprising is that this is but a licensing deal. Granted, Sanofi has increased its 4% stake in Regeneron to 19%, for $312 million. But a standstill agreement prevents it from increasing its share beyond 30% four years hence.

By that time, it’ll be clearer whether the deal’s as productive as Sanofi needs it to be. The most advanced candidate, targeting the IL-6 receptor, has already begun clinical trials in rheumatoid arthritis and a follow-on antibody to Delta-like ligand-4 (an anti-angiogenic approach) should reach the clinic next year. The deal’s potential output “will reinforce our presence in oncology and internal medicine” (including RA), noted Jean-Claude Muller, SVP, Admin and Resources, “but it’s not limited to these areas. Any target coming out will help our portfolio.”

Indeed, Sanofi’s a bit desperate these days, following the rimonabant (Acomplia) flop and a large patent expiry cliff due at the end of 2012. So why didn’t they just buy Regeneron? Management didn’t answer that question on the call. Perhaps they don’t think exclusive rights to the technology are necessary--Regeneron in February this year licensed its technology, for the first time ever, to AstraZeneca, and shortly after to Astellas. “We don’t expect this deal to have any impact on those arrangements,” Sanofi said.

Besides, Regeneron hasn't got a drug on the market yet. And Sanofi already has a large stake, through a 2003 collaboration, in Regeneron's most advanced program, VEGF Trap (aflibercept), which began Phase III trials in prostate and non-small-cell lung cancer in August.

Sanofi may feel it doesn't need to spend billions of dollars (Regeneron’s market capitalization was about $1.1 billion this morning, although well short of its Spring peak) buying a group that may work better as a standalone. It wouldn't be the first time the Roche/Genentech-style model has been emulated. And anyway, with Sanofi holding a 19%-plus stake, any other predator’s going to struggle.

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